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House OKs bill increasing feds' retirement contributions

Thursday - 5/10/2012, 5:32pm EDT

By ANDREW TAYLOR
Associated Press

The GOP-controlled House passed legislation Thursday to avert looming automatic reductions in the Defense budget by cutting domestic programs and requiring federal workers to contribute more toward their retirement.

The Sequester Replacement Act of 2012, introduced by Chairman of the House Budget Committee Rep. Paul Ryan (R-Wisc.), nullifies the across-the-board cuts known as sequestration that are set to kick in at the beginning of 2013.

The alternative deficit-reduction plan includes $300 billion in alternative cuts, including recommendations from various House committees.

Bill proposes 5 percent cut in take-home pay for feds

Among them, a cost-saving recommendation from the House Oversight and Government Reform Committee that proposed gradually increasing federal employees' pension contributions by 5 percent over five years.

Federal workers under the Federal Employees Retirement System now pay 0.8 percent of their salaries toward their pensions while the government kicks in 11.7 percent. Under the House plan, by 2017 federal workers under FERS would contribute 5.8 percent — essentially a 5 percent cut in take-home pay. The bill would also eliminate a supplementary payment for feds who retire before they're eligible for Social Security, however, that would only apply to new federal hires.

The House approved the measure in a partisan 218-199 vote, sending it to the Senate, where it's a dead letter with Democratic leaders, who insist on keeping the automatic cuts in place until Republicans agree to tax increases.

The House bill would prevent a $55 billion Pentagon cut that defense hawks warn would force troop cuts, military base closings and a significantly smaller Navy and Air Force, as well as an 8 percent cut to domestic agency operating budgets.

The replacement cuts also include blocking illegal immigrants from claiming refundable child tax credits and cutting almost 2 million people off of food stamps.